Playbook for 2024: CEO sentiments on the return to office are evolving. Here’s what’s changing.
This story is part of the Playbook for 2024 series — a compilation of stories to help business owners navigate the evolving business climate in the new year. Get more best practices for businesses at The Playbook site and sign up for our weekly The Playbook newsletter for a regular roundup of stories to help grow your business, advance your career and simplify your professional life.
American CEOs are far more optimistic about office returns than they were just a year ago, and many also plan to reward employees for coming back.
Those are two of the top takeaways from the latest U.S. CEO Outlook survey by corporate-services firm KPMG, which found 62% of respondents believe corporate employees whose roles used to be based in the office would again be working in the office in the next three years — a huge jump from the 34% who believed that in 2022.
About 34% of this year’s respondents envision workers in hybrid positions, down from the 45% who believed that last year. But just 4% of CEOs say corporate jobs will be fully remote, down from 20% who believed that a year ago.
The increased optimism comes after a year in which many companies called workers back to the office more regularly — with many beginning to more closely track hybrid policies that had already been in place. The push for more returns also has coincided with more difficult economic conditions, which has hastened calls to return, as well as many companies shifting their focus from recruitment to retention. Additionally, the job market has softened, which has given employers more leverage than they had a year ago — even though recruiters say workers still have more leverage than they had before the pandemic.
“CEOs certainly want more in-person work, but return-to-office strategies cannot be one-size-fits-all — they require a deep understanding of employee dynamics and barriers to more in-person activity,” said Paul Knopp, KPMG U.S. chair and CEO in a statement accompanying the data.
KPMG’s survey found many CEOs are willing to incentivize the return to the office, with 90% of responding saying they would reward employees who make an effort to come back to the office with favorable assignments, raises or promotions.
Experts say companies need to be careful with preferential treatment for those working in the office more frequently — especially if the company policy allows for hybrid work.
If particular demographic groups within a company choose to work at home more frequently than others, employment attorneys have told The Playbook companies could be setting themselves up for potential litigation if remote workers don’t have equal access to training sessions and other opportunities. Additionally, some employees may have work-from-home accommodations with legal protection.
Beyond that, claims proximity bias can cause challenges in a hybrid environment if employees feel they are being punished for utilizing the work-from-home flexibility offered by the company. Here are best practices for combating proximity bias.
CEOs are confident about business growth
The CEOS who took part in the KPMG survey are bullish about more than just a return to the office. They also are confident in the growth prospects for the United States as a whole (at 84%) and for the global economy (77%) over the next three years. However, optimism for their own company’s future declined somewhat from 12 months ago, dropping from 95% last year to 77% in 2023.
CEOs also were less confident on earnings growth, with 49% saying they expect up to 2.5% growth and 24% expecting 2.5% to 5% growth. At the same time, they have their eyes on the potential threats to their businesses over the next three years, with cost of living rising to the top of their concerns list, with 80% of CEOs saying they are concerned about it. Among additional concerns, 77% of CEOs said they are concerned about regulatory issues, and 76% are concerned about disruptive technology.
CEOs plan investments in AI
One element that has swept the business community — and generated substantial pushback across the country — has been “generative” artificial intelligence, led by companies such as OpenAI, which released ChatGPT to massive public use in 2022. Generative AI, which creates content based off of large data sets, is distinct from “predictive” AI, which uses data to forecast or predict events.
About 72% of CEOs said generative AI is a top investment priority despite the overall economic uncertainty, and 63% said they expect to see a return on their generative AI investments in three to five years, while 21% expect a return within three years.
In what areas do the CEOs expect to see those returns? They cited increased profitability, new product and market growth opportunities, increased innovation, and help with fraud detection and cyberattack responses. But Knopp said CEOs need to be careful about the ethical use of AI and its overall effectiveness.
“Generative AI is a promising pathway to growth that is rapidly accelerating the rate of innovation in our economy. However, CEOs must engage their workforce to drive both ethical and effective use of generative AI,” he said.
CEOs are aware of the potential issues too, with 85% viewing AI as a double-edged sword, giving cyberattackers a new tool while also providing protection from those same attackers. But 81% believe a lack of regulations will be a barrier to their successful use of the technology, and 52% said ethical challenges will be the biggest obstacle when it comes to implementing AI at their own companies.
Source: GWFM Research & Study